More policy support urged for foreign trade growth
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Loading... - Aiguo Wang
- 08 Jun 2023
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China's foreign trade experienced a slower growth rate than initially anticipated in May due to various challenges, including escalating geopolitical tensions and a weak global economy. These factors have dampened global demand, leading experts to advocate for increased policy support to stabilize China's export growth.
Given the gloomy global economic forecast and the anticipated weakening of external demand, China's foreign trade is expected to face pressure. Experts suggest that continuous government support is essential to address businesses' concerns and sustain stable growth.
In May, China's foreign trade expanded by a mere 0.5 percent, reaching 3.45 trillion yuan ($485 billion). Data from the General Administration of Customs revealed a 0.8 percent year-on-year decrease in exports, totaling 1.95 trillion yuan, while imports saw a 2.3 percent increase, amounting to 1.5 trillion yuan.
Analyst Zhou Maohua from China Everbright Bank explained that the modest drop in exports during May was partly due to a high base figure recorded during the same period the previous year. Additionally, domestic exporters faced inadequate market demand after fulfilling a backlog of orders disrupted by the pandemic.
The world economy and global trade have been adversely affected by the Russia-Ukraine conflict, persistent high inflation, and tighter monetary policies. These factors have contributed to sluggish global trade. Zhou emphasized that shrinking external demand will significantly impact China's foreign trade for the foreseeable future.
The foundation for the recovery of China's foreign trade has not been fully established yet. It is crucial to implement further supportive policies to address the various challenges and ensure stable growth, according to Zhou.
Xu Hongcai, deputy director of the economic policy committee at the China Association of Policy Science, emphasized the importance of leveraging market diversification to cushion the impact of declining demand from countries such as the United States and Japan.
From January to May, China's total imports and exports grew by 4.7 percent year-on-year, reaching 16.77 trillion yuan. The Association of Southeast Asian Nations (ASEAN) remains China's largest trading partner. Data from the administration indicated that China's trade with ASEAN member states amounted to 2.59 trillion yuan, a 9.9 percent year-on-year increase. Additionally, China's trade with countries and regions involved in the Belt and Road Initiative expanded by 13.2 percent year-on-year, totaling 5.78 trillion yuan.
Countries and regions participating in the Belt and Road Initiative and ASEAN member states are emerging as new drivers of China's foreign trade. Xu emphasized the need to further tap into their trade potential. He also suggested harnessing the Regional Comprehensive Economic Partnership, which is fully operational for all 15 members, to expand the market in Southeast Asia through preferential tax rates.
Zhou from China's Everbright Bank stressed the importance of high-end manufacturing industries, such as automobile exports, in facilitating the stable growth of China's foreign trade. Between January and May, exports of mechanical and electrical products increased by 9.5 percent year-on-year, amounting to 5.57 trillion yuan. Notably, automobile exports reached 266.78 billion yuan, a significant 124.1 percent year-on-year growth.
Zhou recommended that domestic manufacturers stay attuned to shifting global market demands, invest more in innovation and production capacity, and provide higher value-added products to secure more orders from global buyers.
Zhang Jianping, head of the Center for Regional Economic Cooperation at the Chinese Academy of International Trade and Economic Cooperation, suggested improving policies to facilitate foreign trade and reduce overall business costs, thereby enhancing competitiveness.
He emphasized the need for inclusive financing services, deeper tax and fee cuts, and expanded coverage of export credit insurance. Additionally, industry associations and chambers of commerce should play a pivotal role in helping firms secure more orders.
